Posted tagged ‘First-Time Homebuyers’

It seems that this is really a seller’s market except for the stringent requirement to qualify for a mortgage and these seem to be getting a little bit more borrower friendly. For a more detailed look at this subject – please read the article below.

Mortgage rates may be rising, but the housing market doesn’t seem to mind. In fact, several indicators have improved alongside rising rates, according to the HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance this week.

The lending atmosphere is becoming friendlier, especially to first-time buyers. Simultaneously, the average time on market for non-distressed properties and the average sales-to-list price ratio both improved year-over-year in December, according to the survey.

“Six months after the May-June 2013 rise in interest rates, the housing market is showing remarkable resilience,” said HousingPulse research director Thomas Popik.

“[U]nderwriting standards are getting a little looser” at Fannie Mae and Freddie Mac, as well, according to Campbell and Inside Mortgage Finance.

The average credit score for GSE loans in the fourth quarter was 743, down from 758 a year earlier. Loan-to-value ratios at the GSEs rose from 75 percent to 76 percent year-over-year in the fourth quarter.

Fannie Mae and Freddie Mac increased their share of the purchase market as well as their share of the first-time homebuyer sector. In fact, the GSEs posted survey highs in both categories, according to the four-year HousingPulse survey. The GSEs accounted to 19.2 percent of purchase loans originated over the last three months of 2013, up from 16.5 percent a year earlier. The GSEs’ share of the first-time buyer market reached 19.5 percent, up from 14.1 percent a year earlier.

Property data through July shows home prices have rebounded completely in more than one-fifth of the nation’s top regional markets, according to a report from Homes.com.

According to the site’s latest report, 22 of the top 100 markets in the United States reported price increases of more than 100 percent from their respective troughs, up from 19 the month prior.

Marketing analyst Nicole Selvaggi explained that most of the markets that have come back completely “never suffered the significant numbers of foreclosures and short sales that characterized the housing economy from 2007 to 2012,” and seven of the top 20 have benefited greatly from energy development from oil, gas, shale, or coal.

“As a result, these markets experienced a very different housing scenario, with lower peaks and higher troughs than other markets in the same region,” Selvaggi said.

At this point, 44 markets have seen a rebound of at least 50 percent, up from 41 in the last report.

In addition to the rebound, all 100 of the markets tracked in the Homes.com Local Market Index Report reported increases in home prices on both a monthly and yearly basis.

In terms of yearly growth, many of California’s most highly populated markets (including the Los Angeles, San Diego, and San Francisco areas) were among the top metros, with five additional smaller cities making the top list.

Barclays forecasts U.S. housing prices to rise by 11.0 percent in 2013 and 7.0 percent in 2014, based on data through the second quarter. Prices are up 7.6 percent and 7.2 percent this year through June, seasonally adjusted for the CoreLogic aggregate and distressed-excluded indices, respectively, according to Barclays’ Q3 Regional Housing Update.

Barclays expects the percentage of distressed real estate to fall most dramatically in Florida in the coming years, from it’s current share of 10.5 percent of the market to 4.3 percent by 2017.

The report anticipates the nationwide distressed property segment to fall from its current 3.8 percent to 2.2 percent by 2017. In the nearer term, Barclays expects distressed inventory to grow slightly in Arizona, California, New York, Ohio, and Texas in 2014. Distressed inventory is anticipated to fall slightly in Florida, Michigan, and Nevada next year.

The report noted that mortgage rates increased by 100 basis points between May and July of 1013. Barclay’s expressed concern that higher mortgage rates, especially in large, desirable cities, could decrease demand and thereby affect Home Price Appreciation (HPA). “Supply in most parts of the U.S. is elastic enough over the medium run to counter changes in demand due to changes in rates.

As such, even if home prices move a little bit in the near term to adjust for changes in, affordability, the effect is mostly absent over the medium term,” Barclays said in a second, related report. “However, this is not true in areas where supply is less elastic due to land constraints or regulations on new development. In those areas, we estimate that home prices decline by roughly 5-10 percent, cumulatively, for every 100bp increase in rates compared with if rates had stayed unchanged.”

Among three buyer types, current homeowner, first-time homebuyer, and investor, the survey showed current homeowners were the only group to see activity rise in June.

Last month, current homeowners represented 44.6 percent of the purchase market, up from 43.8 percent in May based on a three-month moving average.

At the same time, the share for first-time homebuyers fell to 35.7 percent from 36 percent month-over-month.

Even more notable was the decrease in investor purchases. As rising home prices discourage investors, HousePulsefound home purchases from investors slipped to 19.7 percent, down significantly from 23.1 percent from February. The percentage also represents the lowest level since September 2012.

Falling in line with the decrease in investor activity was a drop in the supply of distressed properties.

According to HousingPulse, the share of foreclosure or short sales transactions plummeted year-over-year, falling to 28.2 percent from 40.3 percent in June 2012. The percentage represents the lowest level in at least three and half years.

The HousingPulse survey also revealed investor traffic decreased for the fourth straight month in June.

Until the sales prices of homes increase to the point that they are no longer attractive to investor then the cash buyer will an important part of the real estate market. Please read the article below and let me know what you think.

If it wasn’t for cash sales during the housing downturn, sales today would look much weaker, and the dramatic price declines over the past few years would have been even steeper, according to the latest MarketPulse report from CoreLogic.

According to the report, from 2000 to 2005, cash sales remained steady, representing around 25 percent of all sales. When the real estate market crashed in 2007 and 2008, the share of cash sales—driven by the rise in REO sales—jumped and eventually peaked above 40 percent two years ago.

While cash sales still remain elevated, they are past their prime point and are slowly fading.
For 19 straight months now, cash sales have been declining gradually on year-over-year basis.

According to the data provider, cash sales represented 39 percent of sales in May 2013, down from 40 percent a year ago.

Cash sales have also provided a major boost to prices in certain markets. Overall, CoreLogic stated median prices for cash sales increased 24 percent year-over-year compared to 15 percent for all sales.

CoreLogic also examined cash sale trends among the 10 largest markets.

According to the report, the idea that hardest hit markets have the largest share or increase in cash sales is a “myth.” For example, New York actually had the highest cash sales share at 53 percent, though hard-hit markets such as Riverside, California, and Phoenix also held high shares that exceeded 40 percent.

Interestingly, in some markets, investor activity has shifted from REO and short sales to non-distressed sales, leading an a surge in prices for non-distressed cash resales, CoreLogic explained.

Repeat buyers and sellers expressed more satisfaction with the their real estate company compared to customers who were selling or buying a home for the first time, according to the J.D. Power 2013 Home Buyer/Seller Satisfaction Study.

For the year, repeat homebuyers averaged a score of 817 out of 1,000, while the score for repeat sellers was 803. On the other hand, the score for first-time buyers and sellers was 797, J.D. Power reported.

To measure satisfaction, the study looked at four factors in the homebuying experience: agent/salesperson, real estate office, closing process, and variety of additional services.

The study also found first-time homebuyers have been more active this year, representing 49 percent of buyers in 2013 compared to 40 percent in 2012. At the same time, the percentage of first-time home sellers jumped from 30 percent in 2012 to 44 percent this year.

The surge in first-time buyers and sellers coincided with a decrease in listing prices and an increase in distressed transactions.

For example, the survey noted the average listing price this year has decreased by 11 percent to $200,000 compared to $225,000 last year.

Additionally, foreclosure purchases bumped up to 19 percent from 17 percent last year, while short sale purchases edged up to 15 percent from 14 percent.

On the seller-side, the use of short sales jumped to 20 percent in 2013 from 14 percent a year ago.

With more transactions involving a foreclosure or short sale, J.D. Power explained it is even more important for customers to have the right information.

“Real estate companies remain challenged in adapting their customer service approach to best meet the needs of first-time home buyers and sellers. They need to educate these customers by explaining the current state of the market, discuss foreclosure and short sale transactions, and walk them through every step of the closing process,” said Christina Cooley, director in the diversified services industries practice at J.D. Power.

When comparing activity among the buyer types for non-distressed properties, non-investors held a significant lead.

In March, investors accounted for 13.3 percent of the market share for non-distressed properties, while current homeowners represented 50 percent of the market. First-time homebuyers also made up a significant portion at 36.8 percent.

For purchase activity overall, the HousingPulse survey found current homeowners accounted for 42.2 percent of the market share Activity from first-time homebuyers picked up and reached an eight-month high after accounting for 36.1 percent of market share. At the same time, investor activity represented just 21.8 percent of market share in March. HousingPulse results also revealed investor market share nationwide has been ranging between 19 and 23 percent for much of the past year.

As non-investor activity strengthens, the survey showed the non-distressed market is benefitting as well. Offers for non-distressed properties heated up in March, with the three-month moving average hitting a three-and-a-half year high at 2.2, according to the survey. In California, non-distressed properties received four offers on average.

Non-distressed properties also stayed on the market for a shorter period of time, averaging 10.9 weeks, which is the lowest level the survey has recorded in three-and-a-half years. The average sales-to-list-price ratio for non-distressed properties also improved and rose to 96.8 percent in March, up from 94.9 percent a year ago.

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